Page II: New dual-core processors will make conventional software licensing models obsolete. What's next?
Beyond discussing how to count chips, AMD also recommends that companies seek alternative ways of charging for software.
"We want software companies to get fair money for fair performance, but there are different ways than just counting processors," said Margaret Lewis, software strategy manger for servers and workstations at AMD. Companies can go back to a more traditional model of charging on a per-user basis, she said.
HP and Sun also urge counting by socket. Brad Anderson, general manager of HP's Industry Standard Server business, said in a recent interview that the method gives customers more bang for their buck -- at software companies' expense.
"Oracle is very uncomfortable with the scenario. A lot of independent software vendors are," Anderson said. "But you shouldn't be penalised for the amount of cores you put on the chip."
IDC, an influential analyst firm that monitors and predicts market share, has also stopped counting cores. The firm declared in June that it will categorise servers by the number of sockets, meaning that a computer with four dual-core processors would be counted as a four-processor machine. A chip's ability to execute multiple instruction threads simultaneously also won't increase processor count, IDC said.
Intel, too, recommends that the multicore chips be considered a single unit. The company's policy is consistent with other chip-level advances it has introduced over the years, such as multithreading, or "hyperthreading," which makes the operating system view a single processor as two chips, said William Swope, general manger of Intel's software and solutions group.
"It's not that we don't have empathy, it's not that we don't understand the issues, but you have to come down one way or the other," Swope said.
Multicore processors are only one of a number of technology changes that promise to complicate pricing.
Microsoft needed to revamp its licensing policies when Intel's Xeon processors debuted in 2002. The new servers sometimes made it appear to Windows as though there were double the number of chips on a server. Microsoft decided to charge customers only for the number of physical processors present in a server.
Virtualisation, another technology becoming increasingly prevalent, also complicates licensing. Virtualisation enables companies to dedicate a portion of a processor's horsepower to a specific task, giving customers more control over how their servers' processing resources are allocated.
Edouard Bugnion, chief technology officer of virtualisation software company VMware, now a division of EMC, said that in the next two years, a shift will begin toward pricing models that better reflect the amount of computing work done -- which is the central idea of utility computing. The industry also needs to explore other pricing mechanisms that measure service levels, such as whether goals for performance or system availability are met.
"Most customers want flexibility and to pay based on a service-level agreement," Bugnion said. "Right now, there is no licensing or resource-metering model to use."
Pricing complexity is a problem that pushes some companies to purchase rights to more software licenses than they might need, Summit Strategies analyst Dwight Davis said. "Customers often overpurchase to protect against charges of piracy," he said. "Software licence management is often a full-time job -- and one that often generates more ill will than satisfaction with software vendors."
Software makers are split
Large software companies have been pondering licence modifications to address multicore processors. But there's no universal agreement on licensing changes.
Oracle considers a dual-core server a two-processor server when charging for its server software. The company is looking at additional licensing methods to complement its current practice, according to Jacqueline Woods, vice president of global pricing and licensing strategy at Oracle.
Similarly, IBM, which has been selling dual-core servers for about three years, considers two cores as two processors for software licensing purposes, according to a company representative.
Other software sellers have staked out the opposite position.
Not only does Sun prefer the socket definition for a processor, it argues for a radical pricing structure change. When selling its server and desktop software, it charges a company a fixed annual fee based on the customer's total number of employees, letting the customer use the software as much as it likes.
Novell licenses its SuSE Linux operating system on a per-"physical CPU" basis. If a server has a multicore processor, the customer will pay as though that were a single chip.
BEA Systems, which sells infrastructure software for running business applications, has taken a slightly different tack. The company adds a 25 percent premium for every server processor that has two cores -- a practice that puts BEA more in line with how hardware makers price dual-core servers.
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"To argue that the cost of a licence should change because of an architectural change, we made runs counter to the evolution of things."
-- William Swope, Intel
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"Dual core does not equal two CPUs, in terms of performance," said Kuldip Hillyer, a manager in the strategic marketing group at BEA. "Hardware vendors don't charge you double (the cost of a single-core processor); they charge a 30 (percent) to 40 percent premium."
Microsoft said it is still pondering how to tackle dual-core licensing. The company said it is committed to developing "flexible pricing models" and has already introduced some alternatives, according to Sunny Jensen Charlebois, product manager in the worldwide licensing and pricing group at Microsoft.
For example, when it released its Microsoft Operations Manager 2004 management software, it offered the option to pay based on the number of devices managed rather than on a per-processor or per-end user basis.
Intel's Swope says calling a multicore processor a single CPU helps simplify discussion around software licensing -- already a complicated issue. Hardware manufacturers use an array of techniques to boost performance and will continue to do so.
"Call it a unit or a module," Swope said. "But to argue that the cost of a licence should change because of an architectural change we made runs counter to the evolution of things."
Although there's no sign of what the dominant pricing model will be, the one thing people can count on is significant licensing change.
"Some licensing models are showing signs of strain, none more than the per-CPU model common to databases and application servers," Summit Strategies' Davis said. "The static per-CPU model seems destined for extinction."
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CPU pricing causes unnecessary complication when trying to put together a system. For example, I may have an 8 CPU server with plenty of capacity. 1 or 2 CPUs may be ample for my needs but because the software has CPU licensing I am forced to either buy a new server or cough up for the "potential" to use other CPUs that may never be realised.
The CPU licensing model is based on greed. The vendors are basically saying they want a cut of your productivity gains with the assumption that if you use 8 CPUs then you get 8x productivity gain over 1 CPU. That may be fine for the classic monolith apps like SAP that would often reside on their own server but now you get lots of smaller applications that share servers - but still try to operate on a per CPU basis.
What is needed is for the CIOs of some of the larger organisations to stand up to the software companies and refuse to have their harware architecture dictated by vendor sales models. Cut vendors with CPU licensing from the short-lists and they will soon change their thinking.
I dont know how long software companies think they can hang on to their 80s business models.